The Pensions Regulator (TPR) will aim to prosecute companies that wilfully evade their auto-enrolment duties.
The watchdog said it will not tolerate businesses that employ "dishonest, wilful or fraudulent" behaviour to avoid paying their employees' pensions.
TPR warned: "This is deemed to be the most harmful and detrimental form of noncompliance and, as such we consider this unacceptable. We will aim to prosecute these offences in order to punish this type of behaviour and to act as a deterrent to others."
In its compliance and enforcement strategy, published today, the watchdog said businesses will face escalating fines of up to £10,000 a day to make sure there is no financial benefit for shirking the responsibilities.
The regulator said one of its main aims will be to restore contributions to employees so they do not lose out if an employer breaches the requirements.
TPR chief executive Bill Galvin said there would be consequences for consistent non-compliance.
He said: "For those that do not engage we want to make it clear there are consequences. We will apply the law fairly and where we find consistent or wilful non-compliance we will use our powers, so that employees do not miss out oncontributions they are due."
Employers who fail to comply will face statutory notices, penalties or escalating fines, with the looming threat of court action and possible prison sentences.
To help detect breaches, the regulator will provide a confidential whistleblowing facility which will be unveiled in July.
The announcement comes as the regulator gears up for the first wave of duties that come into force from July where all employers, regardless of their staging date, will be banned from offering incentives to their workers to opt out of an auto-enrolment pension.
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